Union Bank of Hong Kong has the full backing of its Beijing parent, China Merchants Holdings (CMH), to enlarge capital assets and boost profitability. Speaking after the bank's annual meeting yesterday, CMH president and bank chairman Li Yinfei said the bank was still fairly small in terms of capital size. He said CMH would give full support to the bank's development with the ultimate aim of boosting its ranking within the industry. 'We [CMH] are studying how to further enlarge the capital asset of the bank through various channels such as the share placement conducted last month,' Mr Li said. Union Bank raised HK$505 million through a share placement in which CMH subscribed for the majority to maintain its stake at 60 per cent. Managing director David Yau Man-tak said asset capital and profits had seen double-digit growth in recent years. 'The bank's future development will see it strengthen traditional banking business such as deposit-taking and lending, expand its branch network, enhance its service standards and enlarge its securities business,' Mr Li said. He said Union Bank was looking at merchant banking and seeking to foster co-operation with China Merchants Bank, a mainland bank in which CMH has 35 per cent and which has opened a representative office in Hong Kong. Mr Yau said Union Bank aimed to increase its branches in the territory from 21 to 25 in three years. A Western branch is due to open in June. Union Bank sold its 16.7 per cent stake in the Luomei section, in Guangdong province, of National Highway 324 to China Merchants Hai Hong Holdings Co for US$60 million, compared with an acquisition cost of $5 million. Mr Yau said in future the bank would focus on provided financing to mainland infrastructure projects.